REG - Argos Resources Ltd - 2017 Financial Results
RNS Number : 9137HArgos Resources Ltd16 March 201816 March 2018
ARGOS RESOURCES LIMITED
("Argos" or "the Company")
2017 Financial Results
Highlights
Argos Resources Ltd (AIM: ARG.L), the Falkland Islands based exploration company focused on the North Falkland Basin, announces its financial results for the year ended 31 December 2017.
US$118,000 profit
US$758,000 cash reserves at 31 December 2017
The Company retains an Overriding Royalty Interest (the "ORRI") of 5% of all oil and gas produced over the life of Licence PL001 in the North Falkland Basin (the "Licence") from all hydrocarbon discoveries developed within the Licence area
All future expenditures incurred on the Licence will be at no cost to the Company
The Company will receive future cash payments of $405,000 per annum from Noble Energy Falklands Limited ("Noble") and Edison International S.p.A ("Edison") which will be sufficient to meet its ongoing running costs until first oil production
A three year extension of the Licence was approved in 2016 which extends the current Second Phase of the Licence to November 2019
The full Annual Report and Consolidated Financial Statements can be read and downloaded from the Company website: http://www.argosresources.com/news.php?page=regulatory-news
Argos Resources Limited (+500 22685)
www.argosresources.com
Ian Thomson, Chairman
John Hogan, Managing Director
Cenkos Securities plc (Nomad & Broker)
Derrick Lee (+44 131 220 9100)
Neil McDonald (+44 131 220 6939)
Combined Chairman's statement and Managing Director's review
Oil prices rose steadily during the second half of 2017, supported by sustained production curtailments from a number of leading OPEC and non-OPEC producers. The Brent oil price at year end 2017 approached $67 per barrel, an increase of over $10 per barrel from the beginning of the year. The industry response to this has so far been muted, with concerns about the sustainability of these price levels continuing for the long term.
A Participation Agreement between Noble, Edison and the Company continues to be in effect. The Participation Agreement confirms the Company's entitlement to a 5 percent Overriding Royalty Interest in Licence PL001 in the North Falkland Basin. This royalty interest entitles the Company to 5 percent of all oil and gas produced over the life of the Licence, free and clear of all costs. Also, under the terms of the Participation Agreement, the Company has been receiving quarterly cash payments totalling 300,000 per annum during 2017, which is sufficient to meet its ongoing running costs.
The Company announced in August 2016 that a three-year extension to the Licence had been approved by the Executive Council of the Falkland Islands Government and by the UK Secretary of State for Foreign and Commonwealth Affairs. This approval extends the current Second Phase of the Licence to November 2019, after which a Third Licence Phase of 10 years is available to the Licensees.
With world-wide exploration drilling activities still suppressed, the Company cannot yet forecast when drilling operations might commence on the Licence. However, the Overriding Royalty Interest in the Licence continues through the Second Phase of the Licence and any further phases beyond, and the Company's future running costs are covered, so we remain well positioned. The Company continues to be positive about the exploration potential of the Licence Area.
Results and dividend
The results for the year and the Group's financial position as at the year-end are shown in the attached financial statements. The directors have not recommended a dividend for the year (2016: $nil).
Business review
The Group has returned a profit for the year ended 31 December 2017 of $118,000 (2016: loss of $16,000) which equates to a profit per share of 0.05 cents (2016: loss per share of 0.007 cents). The profit reflects the full effects of management efforts to cut costs in 2016, positive foreign exchange differences and the receipt of income under the Participation Agreement.
Administration expenses were $329,000 in 2017 compared to $427,000 in 2016.
Shareholders' equity has increased marginally from $29.32 million to $29.46 million in the year since 31 December 2016, as receipts under the Participation Agreement offset the administration costs, leaving a small surplus. Cash in the year increased from $701,000 to $758,000.
Outlook for the next financial year
The Participation Agreement with Noble and Edison means that the Group will continue to receive quarterly cash payments totalling 300,000 per annum, in Sterling, which equates to $405,000 at the year-end exchange rate and covers the Group's ongoing costs. There is a risk that Noble and Edison withdraw from the agreement. In such circumstances the Licence would revert back to Argos, subject to Government approval. Given that Noble and Edison have been granted an extension to the Licence, which now runs until November 2019, withdrawal is considered unlikely. The Group is therefore fully funded for the foreseeable future.
Ian Thomson John Hogan
Chairman Managing Director
Consolidated statement of comprehensive income
Year ended 31 December 2017
Year
ended
31 December
2017
$'000Year
ended
31 December
2016
$'000Other income
380
505
Administrative expenses
(329)
(427)
Finance income
1
1
Foreign exchange gains/(losses)
66
(95)
Profit/(loss) for the year attributable to owners of the parent
118
(16)
Total comprehensive income for the period
attributable to owners of the parent
118
(16)
Basic and diluted earnings/(loss) per share (cents)
0.05
(0.007)
Consolidated statement of financial position
As at 31 December 2017
2017
2016
$'000
$'000
Assets
Non-current assets
Royalty interests
28,749
28,749
28,749
28,749
Current assets
Other receivables
14
15
Cash and cash equivalents
758
701
Total current assets
772
716
Total assets
29,521
29,465
Liabilities
Current liabilities
Trade and other payables
59
148
Total liabilities
59
148
Total net assets
29,462
29,317
Capital and reserves attributable to
equity holders of the Company
Share capital
6,696
6,669
Share premium
30,071
30,071
Retained losses
(7,305)
(7,423)
Total shareholders' equity
29,462
29,317
Consolidated statement of cash flows
Year ended 31 December 2017
Year
ended
31 December
2017
$'000Year
ended
31 December
2016
$'000Cash flows from operating activities
Profit/(loss) for period before taxation
118
(16)
Adjustments for:
Finance income
(1)
(1)
Foreign exchange
(67)
92
Depreciation
-
3
Net cash inflow from operating activities
before changes in working capital
50
78
Decrease in other receivables
1
37
(Decrease)/increase in other payables
(89)
54
Net cash (outflow)/inflow from operating activities
(38)
169
Investing activities
Interest received
1
1
Proceeds on the sale of assets
-
172
Net cash received from investment activities
1
173
Financing activities
Issue of ordinary shares (share options exercised)
27
-
Net cash from financing activities
-
-
Net (decrease)/ increase in cash and cash equivalents
(10)
342
Cash and cash equivalents at beginning of period
701
451
Exchange gains/(losses) on cash and cash equivalents
67
(92)
Cash and cash equivalents at end of the year
758
701
Consolidated statement of changes in equity
Year ended 31 December 2017
Share
capital
$'000
Share premium
$'000Retained
losses
$'000
Total
equity
$'000At 1 January 2016
6,669
30,071
(7,407)
29,333
Total comprehensive income for the year
-
-
(16)
(16)
At 31 December 2016
And 1 January 2017
6,669
30,071
(7,423)
29,317
Total comprehensive income for the year
-
-
118
118
Shares issued (share options exercised)
27
-
-
27
At 31 December 2017
6,696
30,071
(7,305)
29,462
In preparing the financial information in this statement the Group, which consists of the Company Argos Resources Ltd, and its wholly owned subsidiary Argos Exploration Ltd, has applied policies in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS"). The financial information has been prepared under the historical cost convention.
The financial information set out above does not constitute the company's statutory accounts for 2016 or 2017. Statutory accounts for 2016 and 2017 have been reported on by the Independent Auditors. The Independent Auditors' Reports on the Annual Report and Financial Statements for 2016 and 2017 were unqualified and did not draw attention to any matters by way of emphasis.
This information is provided by RNSThe company news service from the London Stock ExchangeENDFR UVOKRWSAOAAR
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